On the go: Britain’s largest companies and financial institutions will legally have to report on climate-related risks and opportunities from April 6 2022, the government has announced.
The Task Force on Climate-related Financial Disclosures aligned standards will require more than 1,300 of the largest UK-registered companies to disclose climate-related financial information on a mandatory basis.
The UK will become the first G20 country to make such disclosures mandatory, the government claimed.
By applying a common set of requirements aligned with the TCFD recommendations, UK companies will be provided with a uniform way to assess how a changing climate may impact their business model and strategy, and ensure they are well placed to harness opportunities from the UK’s transition to net zero.
John Glen, economic secretary to the Treasury, said: “With COP26 in just a few days, I’m proud that we are taking steps to enshrine the UK’s transition to a greener financial system into law.
“We are already world leaders in green finance, having recently launched the UK’s first green savings bond and raised £16bn for green projects through our green gilts.
“These TCFD requirements will not only help tackle greenwashing but also enable investors and businesses to align their long-term strategies with the UK’s net-zero commitments,” he added.
The legislation, unveiled on Friday, will become law in April 2022 subject to parliamentary approval.
It follows the publication on October 19 of the government’s net-zero strategy, which outlined a commitment to ensure the UK’s financial system is the greenest in the world.
James Alexander, chief executive at the UK Sustainable Investment and Finance Association, welcomed the legislation, adding that it “marks another important step in strengthening the UK’s leadership on climate disclosure ahead of COP26”.
He said: “It is very positive to see a scenario analysis requirement now included in the final regulations for companies, which UKSIF and others have called for.
“This is necessary to ensure companies can provide to investors and savers a clearer and more meaningful picture of climate risks and the opportunities to support the transition in their annual report and accounts.”
Earlier in October, the government published its “roadmap to sustainable investing”, but Pensions Expert reported on industry concerns that the plan would not go far enough to make a significant difference, and that pension schemes may need more clarity on how the various reporting requirements relate to one another.
